Section 286 of the Companies Act prescribes: “(1) Notice of every meeting of the board of directors of a company shall be given in writing to every director for the time being in India, and at his usual address in India to every other director.
(2) Every officer of the company whose duty it is to give notice as aforesaid and who fails to do so shall be punishable with fine which may extend to one thousand rupees.’’
The notice should contain the time, date and place of meeting. Section 286 does not provide for a minimum days for giving a notice for convening a Board meeting. However, the articles of a company may prescribe such time-limit. It has been held that even a few hours notice would suffice. [Browne v. La Trinidad, (1887) 37 Ch D 1 (CA)]. However, in another case it was held that a few hours’ notice was not sufficient because the Board meeting was held by certain directors, who wanted to ensure that by giving a short notice the other directors would not be able to attend the same. [In Re, Homer District Consolidated Gold Mines, (1988) 39 Ch D 546 (CA)].
It would, of course, be sufficient compliance with the provisions of Section 286 if, for instance, the directors are duly informed that in future the meeting would be held on the first Saturday of every month. But even then the notice of meeting should be given.
Notice must be given even to a director who has stated that he will be unable to attend the meeting.
If notice of the meeting is not given to one of the directors, meeting of Board of directors is invalid and resolutions passed are inoperative. [Parmeshwari Prasad Gupta v. Union of India (1947) 44 Comp. Cas. 1 (SC]. Where, however, notice is not given as required but all the directors attend the meeting and do not object to the absence of notice, the proceedings of the meeting will not be invalid. [Bharat Fire and General Insurance Co. Ltd. v. P.P. Gupta (1974) Comp. Cas. 1 (S.C.)].
If, by an accidental omission the notice is not given to any director and a meeting of the Board of directors is held, it is rendered irregular. If the directors nevertheless transact business on behalf of the company at such a meeting. e.g. allot shares, make contracts etc. the rule of indoor management as laid in Royal British Bank v. Turquand applies where outsiders will not be prejudiced by such irregularities if they have no notice of them. A subsequent regularly constituted board meeting may ratify and confirm what was done irregularly, and it will then be valid ab initio.
There is no provision in the Act for notice of adjourned meeting and the Articles of Association may provide for the same. [Promod Kumar Mittal v. Southern Steel Ltd., (1980) 50 Com Cases 555]. Since an adjournment is only a continuation of the meeting, the notice for the first meeting holds good for all the adjournments. [Kerr v. Wilkie, (1860) 1 LT 501]. However, notice of adjourned meeting may be given to directors, who did not attend the original meeting. Where the meeting is adjourned sine die, a fresh notice must be given. Where new business is to be transacted, a fresh notice would be required.
A director is entitled to a notice even though he is residing abroad provided he has furnished his address to the company for sending such notice to him as the right to receive notice cannot be waived. [H.M. Ebrahim Sait v. South Indian Industrial Ltd. (1938) 8 Com Cases 308]. Exception can be made in cases where the Board has decided to meet at fixed intervals. It is necessary to send notice to each and every director who is for the time being in India, even if a particular director has informed the company about his inability to attend the meeting.
When it is known to the directors that one of their collegues is residing mostly out of India and they give him a notice of the Board meeting at his local address, it is quite obvious that the notice is inadequate and it may not even reach him. Such conduct would show lack of probity and fair play on the part of the directors incharge of the company’s affairs. It was held that the meeting and allotment of shares at the meeting could be declared as null and void. [Kamal K. Dutta (Dr.) v. Ruby General Hospital Ltd. (2000) 36 CLA 214, 231 (CLB-PB)].
If the articles are silent; the notice can be sent by pre-paid post or hand delivery. Notice sent by fax is adequate notice [Ferruceio Sias v. Jai Manga Ram Mukhi, (1994) 1 Comp L.J. 345 (Del.)]. But where a director gives specific directions about serving notices, they must be adhered to as far as practicable.
